How Business Works in the Algorithm Era

Great to see Cognizant’s strong performance on the HfS OneOffice Services Blueprint. As a former analyst myself, these things can be tough to call, and of course, the proverbial always hits the fan when they go online because someone, somewhere feels their company should be out on top. This blueprint is insightful to understand what operational excellence looks like because the OneOffice concept is on the money.

The background to this is that companies are finally delivering on a market promise made nearly 20 years ago. I might be showing my age, but I can remember the heady days of “eBusiness” and if you were an IT industry analyst back then, you couldn’t miss the massive IT industry shift around it. eBusiness was really all about the promise of the internet—and it is now, exactly 20 years later that we can deliver on that promise. It explains the rapid digitization and disinter-mediation of industry value-chains and the galloping automation of the processes that underpin them. That promise sketched out 20 years ago is finally here and it stretches from the front-office to the back, and way beyond, as set out by HfS.

My take on this is if you get the platform then you will understand how the promise works. Platforms are quite simply layers of software wrapped around things (you, your customer, a process, a policy or a product or a service etc.); they gather and synthesize data to link things together with customer demand. They are fundamental to any organization serious about creating value in the digital—algorithm—era. It’s the reason why digitally intelligent products, services and experiences are no longer standalone entities but interactive components within an extended ecosystem. These instrumented platforms are growing everywhere, across banking and finance, big pharma, manufacturing, retail, even in government. Everywhere you look, old-world value chains are breaking down and incumbent organizations are on to it, reworking their big company advantages and realigning around them: GE, Bosch, Rio, Siemens (the list goes on); A king’s ransom is now being spent on rethinking work and reorganizing tasks and activities around this tectonic shift in how firms create value today.

Success in the algorithm era will hinge on two things: 1) rethinking the operating model (what HfS calls the “digital underbelly”) and then 2) realigning people around the tasks and activities that create the most human value. So it makes perfect sense that the HfS blueprint measures process digitization with benchmarks for automation, software virtualization, flawless security strategies and the unification of proprietary and third party data. Getting this interplay right is critical as products, services, and experiences become ever more entwined and digitally oriented as complex configurations interdependent on multiple platforms across a diverse set of providers and industries. So, getting some abs on that digital underbelly really matters now because leaders can then work on getting their people realigned around the work that matters.

Regarding the people. If you've hit the intersection between data, automation and human insight and innovation then you’ve hit the bulls eye. We’re seeing it, our clients are seeing it, and the analysts are seeing it too. We wrote about some of the signals on this a couple years ago as part of our exploration about the future of talent, leadership and work space. These are people issues and you need to get them right because people will either kill, or enable, a shift into platforms. Digital companies such as Alibaba, Amazon, Google or Spotify, have seen their platforms spawn cultures and leadership styles that differ markedly from legacy organizations and provide some cultural markers that we can all follow. In a nutshell, there is an appetite for risk rather than an aversion to it; and my own bugbear the silo is simply not tolerated. It’s a message, it seems, that is finally getting through.